Japan April factory output growth at 6-year high

TOKYO: Japan’s factory output in April rose at its fastest pace in six years, government data showed Wednesday, in the latest sign that the economy is gathering steam.

Industrial production expanded 4.0 percent, rebounding from a decline in March and rising at its quickest rate since June 2011 when it grew 4.2 percent.

The figures come a day after separate data showed consumer demand remains weak despite years of government efforts to boost spending.

Still, the latest output numbers are good news for Prime Minister Shinzo Abe, who swept to power in late 2012 on a pledge to reignite Japan’s once-booming economy with a policy blitz comprising massive monetary easing, stimulus spending and structural reforms.

The figures “show that production will be strong in the April-June quarter, underpinning the view that the economy is on a recovery path”, Yoshiki Shinke, chief economist at Dai-ichi Life Research Institute, told AFP.

Japan’s prospects have been improving on the back of strong exports, with investment linked to the Tokyo 2020 Olympics also giving the world’s number three economy a shot in the arm.

Japan’s GDP notched up its fifth straight expansion in the first quarter, the longest string of gains since 2006.

The labour market is tight as separate data on Tuesday showed the nation’s jobless rate stayed at 2.8 percent in April, the lowest in more than two decades.

But private consumption, which accounts for more than a half of Japan’s GDP, remains lacklustre as cash-rich
firms have been reluctant to usher in big pay hikes.

Japan has been struggling to defeat years of on-off deflation and slow growth that followed the collapse of an equity and property market bubble in the early 1990s.

The Bank of Japan has struggled to lift inflation despite years of aggressive monetary easing.

Inflation data released last week showed consumer prices rose for the fourth straight month in April but it was due largely to higher energy bills.

The rise, which came in at 0.3 percent, was still way off the BoJ’s 2.0 percent inflation target — seen as crucial to conquering deflation blamed for holding back the once-booming economy.